NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts
in U.S. dollar thousands, except share and per share data)
NOTE
1 – GENERAL
|
A.
|
SAMSARA
LUGGAGE, INC. (THE “COMPANY”)
|
The
Company was incorporated on May 7, 2007 under the name, “Darkstar Ventures, Inc.” under the laws of the State of Nevada.
The Company is a global smart luggage and smart travel brand. Samsara Luggage unveiled its Next Generation smart carry-on at
the 2020 Consumer Electronics Show (CES). The Next Generation is the first to market a Wi-Fi Hotspot technology for travelers to access
a secured network globally. Samsara Luggage also launched Essentials by Samsara, a safety kit providing commuters with a new layer
of safety with protective items like facemasks, hand sanitizer, disposable gloves and alcohol wipes. These kits are sold individually
and gifted to customers with purchase of the Carry-on Aluminum suitcase or Smart Weekender bag.
During
the last quarter of 2020, Samsara launched Sarah & Sam Fashion and Lifestyle Collection. Sarah& Sam is a part of Samsara
Direct business model prompted by the travel limitations due to the coronavirus pandemic, leveraging the company’s established
digital assets and manufacturing and fulfillment supply chain capabilities to offer additional consumer products that respond to the
changing needs of the market.
On
November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage,
Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May
10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara
Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the
completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely,
designing, manufacturing, and selling high quality luggage products to meet the evolving needs of frequent travelers and also seeking
to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.
The
Common Stock listed on the OTC Pink Marketplace, previously trading through the close of business on November 11, 2019 under the ticker
symbol “DAVC,” commenced trading on the OTC Pink Marketplace under the ticker symbol “SAML” on November 12, 2019.
The Common Stock has a new CUSIP number, 79589J101.
On
October 5, 2020 the Board of Directors of the Company has approved, and the holders of a majority of the outstanding shares of our
common stock, par value $0.0001 per share (the “Common Stock”), have executed a written consent in lieu of a special meeting
approving to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000
to 7,500,000,000 (the “Authorized Capital Increase”).
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As of June 30, 2021, the Company had approximately $197 in cash and cash equivalents, approximately
$872 in deficit of working capital and an accumulated deficit of approximately $8,853. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising
capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional
investments that have not yet been secured. Management is continuing in the process of fund raising in the private equity and capital
markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary
should the Company be unable to continue as a going concern.
On
March 22, 2021, the Company completed a reverse stock split of its common stock. As a result of the reverse stock split, the following
changes have occurred (i) every seven thousand shares of common stock have been combined into one share of common stock; (ii) the number
of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a 7,000-for-1
basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 7,000
-for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses
per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 7,000 -for-1 reverse
stock split.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Unaudited
Interim Financial Statements
The
accompanying unaudited financial statements include the accounts of the Company, prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities
and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have
not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations
and cash flows for the for six-months ended June 30, 2021. However, these results are not necessarily indicative of results for any other
interim period or for the year ended December 31, 2021. The preparation of financial statements in conformity with GAAP requires the
Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and
assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.
Certain
information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles
have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited
condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 30, 2021 (the “Annual Report”). For
further information, reference is made to the financial statements and footnotes thereto included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2020.
Use of Estimates
The preparation of unaudited condensed financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets
and liabilities as of the date of the financial statements. Actual results could differ from those estimates. Estimates are used when
accounting for Warrants and Convertible Note and Going Concern.
Derivative and Fair Value of Financial Instruments
Fair value accounting requires bifurcation of
embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value
for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument
is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not
considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative
financial instruments under ASC 815.
Once determined, derivative liabilities are adjusted
to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations
as an adjustment to fair value of derivatives.
Fair value of certain of the Company’s financial
instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payables, and other accrued liabilities approximate
cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements
and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting
principles and expands disclosures about fair value measurements.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
Fair value, as defined in ASC 820, is the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets,
and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes,
among other things, the Company’s credit risk.
Valuation techniques are generally classified
into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of
the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the
quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable
inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as
follows:
Level 1: Quoted prices (unadjusted) in active
markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities
in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted
prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market
data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or
liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed
by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using
significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of
the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses
for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains
or losses included in earning are reported in the statement of income.
The Company’s financial assets and liabilities
that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
|
|
Balance as of June 30, 2021
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
(U.S. dollars in thousands)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs
|
|
|
-
|
|
|
|
-
|
|
|
|
641
|
|
|
|
641
|
|
Fair value of warrants issued in convertible loan
|
|
|
-
|
|
|
|
-
|
|
|
|
104
|
|
|
|
104
|
|
Total liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
745
|
|
|
|
745
|
|
|
|
Balance as of December 31, 2020
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
(U.S. dollars in thousands)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs
|
|
|
-
|
|
|
|
-
|
|
|
|
493
|
|
|
|
493
|
|
Fair value of warrants issued in convertible loan
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
|
20
|
|
Total liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
513
|
|
|
|
513
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU No.
2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity
(Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity s Own Equity. ASU 2020-06 will simplify
the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible
preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host
contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded
conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that
do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums
for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception
for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective
for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption
is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial
statement presentation or disclosures.
Other new pronouncements issued but not effective
as of June 30, 2021 are not expected to have a material impact on the Company’s financial statements.
NOTE 3 – CONVERTIBLE NOTES
|
A.
|
On June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor.
|
The first tranche of the convertible
debentures in the amount of $200,000 was provided upon execution of the SPA. The second tranche in the amount of $300,000 was provided
on October 23, 2019 upon the Company filing of a Registration Statement on Form S-4 in connection with the Merger with Samsara Delaware.
The third tranche in the amount of $600,000 was provided on November 18, 2019 upon consummation of the Merger with Samsara Delaware and
the fulfillment of all conditions required for the Merger. The Company incurred issuance cost of $100,000 with connection to those convertible
debentures.
Each tranche of the loan will bear interest
at an annual rate of ten percent (10%). The principal amount together with the accrued and unpaid interest will be repayable after two
years. Each tranche of the loan together with the accrued and unpaid interest (or any portion at the discretion of the Investor) will
be convertible at any time six months following the issuance date, into shares of Company’s common stock at a conversion price equal
to the lower of $0.003 per share or 80% of the lowest volume-weighted average price (VWAP) of Company’s share during the period
of 10 days preceding the conversion date.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
(Amounts in U.S. dollar thousands, except share
and per share data)
On January 14, 2021 and pursuant
to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $50 and the accrued
interest in the amount of $4 into 38,303 shares of Common Stock of the Company. The fair market value of the shares was $64.
On February 11, 2021 and pursuant
to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $55 and the accrued
interest in the amount of $3 into 16,713 shares of Common Stock of the Company. The fair market value of the shares was $216.
On April 19, 2021 and pursuant to the
SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $40 and the accrued interest in the
amount of $7 into 40,861 shares of Common Stock of the Company. The fair market value of the shares was $62.
On May 12, 2021 and pursuant to the
SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $60 and the accrued interest in the
amount of $2 into 44,202 shares of Common Stock of the Company. The fair market value of the shares was $103.
On May 17, 2021 and pursuant to the
SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 48,316 shares of Common
Stock of the Company. The fair market value of the shares was $85.
On May 20, 2021 and pursuant to the
SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 50,611 shares of Common
Stock of the Company. The fair market value of the shares was $171.
On May 21, 2021 and pursuant to the
SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,386 shares of Common
Stock of the Company. The fair market value of the shares was $280.
On May 24, 2021, and pursuant to the
SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,407 shares of Common
Stock of the Company. The fair market value of the shares was $322.
On May 24, 2021, and pursuant to the
SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $15 and accrued
interest of $11 into 11,647 shares of Common Stock of the Company. The fair market value of the shares was $68.
As of June 30, 2021 this loan was paid
in full
In accordance with ASC 815-15-25 the
conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be
separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses
in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the
face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in
the statements of operations.
The fair value of the convertible component
was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark
to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the
balance sheet dates:
|
|
December 31,
2020
|
|
Common stock price
|
|
|
1.40
|
|
Expected volatility
|
|
|
227.88
|
%
|
Expected term
|
|
|
0.43
|
|
Risk free rate
|
|
|
0.19
|
%
|
Forfeiture rate
|
|
|
0
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Convertible component
|
|
$
|
330
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
In addition, the Company issued to the
Investor a warrant to purchase 13,095 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within
5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to
the exercise price of the portion of the warrant being exercised.
The Company considered the provisions
of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants
that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise
price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the Company subsequently
issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s own stock.
Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the
Warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement
of operations.
The warrants were estimated by third
party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair
value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:
|
|
June 30,
2021
|
|
Common stock price
|
|
$
|
3,94
|
|
Expected volatility
|
|
|
312
|
%
|
Expected term
|
|
|
2.93 years
|
|
Risk free rate
|
|
|
0.45
|
%
|
|
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Warrants
|
|
$
|
51
|
|
|
|
December 31,
2020
|
|
Common stock price
|
|
|
1.40
|
|
Expected volatility
|
|
|
227.88
|
%
|
Expected term
|
|
|
3.43 years
|
|
Risk free rate
|
|
|
0.19
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Warrants
|
|
$
|
16
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
|
B.
|
On September 3, 2020, Samsara Luggage, Inc. (the “Company”) entered into a second Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor will invest an aggregate amount of $220 in two tranches, and the Company will issue convertible debentures and warrants to the Investor. The first tranche of the convertible debentures in the amount of $150 was provided upon execution of the SPA. The second tranche in the amount of $70 was provided on October 7, 2020. Each tranche of the loan bears interest at an annual rate of ten percent (10%). Each tranche of the investment bears interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche of the investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $0.003 per share, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. As part of the transaction, the Company will issue to the Investor warrants to purchase an aggregate of 2,619 shares of Common Stock, at an exercise price equal to $0.003. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised. The Company has undertaken to increase its authorized shares of Common Stock to at least 7,000,000,000 within 90 days of the closing. The SPA and the convertible debentures contain events of default, including, among other things, failure to repay the convertible debentures by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the convertible debentures into shares of common stock.
On May 24, 2021, and pursuant to the SPA, YAII exercised its option
to convert the Convertible Promissory Note principal in the amount of $50 into 47,247 shares of Common Stock of the Company. The fair
market value of the shares was $281.
On May 25, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $80 into 62,138 shares of Common Stock of the Company. The fair market value of the shares was $249.
On May 28, 2021, and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 57,837 shares of Common Stock of the
Company. The fair market value of the shares was $164.
On June 1, 2021, and pursuant to the SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $20 into 15,559 shares of Common Stock of the Company. The fair market value of the shares was $39.
|
As of June 30, 2021 this loan was paid in full
In accordance with ASC 815-15-25 the
conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be
separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses
in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the
face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in
the statements of operations.
The fair value of the convertible component
was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark
to market the fair value of the derivative at each balance sheet dates:
|
|
December 31,
2020
|
|
Common stock price
|
|
|
1.39
|
|
Expected volatility
|
|
|
227.38
|
%
|
Expected term
|
|
|
1.67
|
|
Risk free rate
|
|
|
0.12
|
%
|
Forfeiture rate
|
|
|
0
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Convertible component
|
|
$
|
157
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
In addition, the Company issued to the
Investor a warrant to purchase 2,619 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within
5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to
the exercise price of the portion of the warrant being exercised.
The Company considered the provisions
of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants
that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise
price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the Company subsequently
issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s own stock.
Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the
Warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement
of operations.
The warrants were estimated by third
party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair
value of the derivative at each balance sheet dates:
The following are the data and assumptions
used as of the balance sheet dates:
|
|
June 30,
2021
|
|
Common stock price
|
|
$
|
3.94
|
|
Expected volatility
|
|
|
312
|
%
|
Expected term
|
|
|
4.18
|
|
Risk free rate
|
|
|
0.70
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Warrants
|
|
$
|
10
|
|
|
|
December 31,
2020
|
|
Common stock price
|
|
|
1.39
|
|
Expected volatility
|
|
|
227.88
|
%
|
Expected term
|
|
|
4.68
|
|
Risk free rate
|
|
|
0.19
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Warrants
|
|
$
|
4
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
|
C.
|
On June 26, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with Power Up Lending Group Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with an initial investment in the form of a convertible loan in the principal amount of $67 (the “Initial Investment”). The SPA contemplates additional financing of up to $925 in the aggregate, subject to the agreement of both parties. The funds are expected to be used to finance the Company’s working capital needs.
|
The convertible loan will bear interest
at an annual rate of eight percent (8%) with a maturity date of June 25, 2021 (the “Maturity Date”). The loan will be convertible
after six months into shares of the Company’s common stock at a conversion price equal to seventy-five percent (75%) of the average
of the lowest trading price for the Company’s common stock during the twenty (20) trading day period prior to the conversion date.
The Company agreed to an original issue discount of $9 and to reimburse the Investor for its costs in the amount of $3. Accordingly, the
net proceeds to the Company from the Initial Investment amounted to $55.
The SPA and the convertible note contain
events of default, including, among other things, failure to repay the loan amount by the Maturity Date, and bankruptcy and insolvency
events, that could result in the acceleration of the Investor’s right to convert the loan amount into shares of common stock.
On January 11, 2021 and pursuant to
the SPA, Power-up exercised its option to convert the Convertible Promissory Note principal in the amount of $ 7 and the accrued interest
in the amount of $ 1 into 7,448 shares of Common Stock of the Company.
As of June 30, 2021 this loan was paid in full
|
D.
|
On April 6, 2021, the Company entered into a third Securities
Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide
the Company with a convertible loan in the aggregate amount of $150 and the Company agreed to issue convertible debentures and a warrant
to the Investor. The loan will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. The investment
will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $3.46,
or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days
immediately preceding the conversion date.
|
In accordance with ASC 815-15-25 the
conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be
separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses
in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the
face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in
the statements of operations.
The fair value of the convertible component
was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark
to market the fair value of the derivative at each of the issuance and balance sheet dates:
The following are the data and assumptions
used as of the issuance date:
|
|
April 6,
2021
|
|
Common stock price
|
|
$
|
1.97
|
|
Expected volatility
|
|
|
322
|
%
|
Expected term
|
|
|
2.00
|
|
Risk free rate
|
|
|
0.16
|
%
|
Forfeiture rate
|
|
|
0
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Convertible component
|
|
$
|
156
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
The following are the data and assumptions
used as of the balance sheet date:
|
|
June 30,
2021
|
|
Common stock price
|
|
$
|
3.94
|
|
Expected volatility
|
|
|
312
|
%
|
Expected term
|
|
|
1.77
|
|
Risk free rate
|
|
|
0.21
|
%
|
Forfeiture rate
|
|
|
0
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Convertible component
|
|
$
|
220
|
|
As part of the
transaction, the Company issued to the Investor warrants to purchase an aggregate of 10,838 shares of Common Stock, at an exercise price
equal to $3.46. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless
exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.
The warrants were estimated by third
party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair
value of the derivative at each of the issuance and balance sheet dates:
The following are the data and assumptions
used as of the issuance date:
|
|
April 6
2021
|
|
|
Common stock price
|
|
$
|
1.97
|
|
|
Expected volatility
|
|
|
322
|
%
|
|
Expected term
|
|
|
5.00
|
|
|
Risk free rate
|
|
|
0.88
|
%
|
|
Expected dividend yield
|
|
|
0
|
%
|
|
Fair Market Value of Warrants
|
|
$
|
21
|
|
|
The following are the data and assumptions
used as of the balance sheet dates:
|
|
June 30,
2021
|
|
Common stock price
|
|
|
$3.94
|
|
Expected volatility
|
|
|
312.2
|
%
|
Expected term
|
|
|
4.77
|
|
Risk free rate
|
|
|
0.82
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Warrants
|
|
$
|
43
|
|
|
E.
|
On June 7, 2021, Samsara Luggage, Inc. (the “Company”)
entered into a fourth Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor will invest
an aggregate amount of $1,250 in three tranches, and the Company will issue convertible debentures and warrants to the Investor, in which
each trench is convertible into shares of the Company’s common stock, par value $0.0001 (the “Common Stock”). The first
trench in the principal amount of $500 was issued on June 7, 2021. The second trench in the principal amount of $500 will be issued within
one (1) business day following the filing of a registration statement on Form S-1 (the “Registration Statement”) under the
Securities Act of 1933, as amended, registering the Conversion Shares issuable upon conversion of the Convertible Debentures with the
Securities and Exchange Commission (the “SEC”). The third trench in the principal amount of $250 will be issued within one
(1) business day following the Registration Statement having been declared effective by the SEC.
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
The Convertible Debentures bear interest
at a rate of 10% per annum (15% on default) and have a maturity date of one (1) year. The Convertible Debentures provide a conversion
right, in which any portion of the principal amount of the Convertible Debentures, together with any accrued but unpaid interest, may
be converted into the Company’s Common Stock at a conversion price equal to 80% of the lowest volume weighted average price of the
Company’s Common Stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. The
Convertible Debentures may not be converted into common stock to the extent such conversion would result in the Investor beneficially
owning more than 9.99% of the Company’s outstanding Common Stock (the “Beneficial Ownership Limitation”); provided,
however, that the Beneficial Ownership Limitation may be waived by the Investor upon not less than 65 days’ prior notice to the
Company. The Convertible Debentures provide the Company with a redemption right, pursuant to which the Company, upon fifteen (15) business
days’ prior notice to the Investor, may redeem, in whole or in part, outstanding principal and interest at a redemption price equal
to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding
and accrued interest; however, the Investor shall have fifteen (15) business days after receipt of the Company’s redemption notice
to elect to convert all or any portion of the Convertible Debentures, subject to the Beneficial Ownership Limitation. In connection with
the Securities Purchase Agreement, the Company executed a registration rights agreement (the “Registration Rights Agreement”)
pursuant to which it is required to file the Registration Statement with the SEC for the resale of the Conversion Shares. Pursuant to
the Registration Rights Agreement, the Company is required to meet certain obligations with respect to, among other things, the timeliness
of the filing and effectiveness of the Registration Statement. The Company is obligated to file the Registration Statement no later than
45 days after the First Closing Date and to have it declared effective by the SEC no later than 105 days after filing (the “Registration
Obligations”).
In accordance with ASC 815-15-25 the
conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be
separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses
in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the
face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in
the statements of operations.
The fair value of the convertible component
was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark
to market the fair value of the derivative at each balance sheet dates:
The following are the data and assumptions
used as of the issuance date:
|
|
June 7,
2021
|
|
Common stock price
|
|
$
|
6.33
|
|
Expected volatility
|
|
|
359
|
%
|
Expected term
|
|
|
1.00
|
|
Risk free rate
|
|
|
0.05
|
%
|
Forfeiture rate
|
|
|
0
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Convertible component
|
|
$
|
423
|
|
The following are the data and assumptions
used as of the balance sheet date:
|
|
June 30,
2021
|
|
Common stock price
|
|
$
|
3.94
|
|
Expected volatility
|
|
|
359
|
%
|
Expected term
|
|
|
0.94
|
|
Risk free rate
|
|
|
0.07
|
%
|
Forfeiture rate
|
|
|
0
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Fair Market Value of Convertible component
|
|
$
|
421
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
The following table presents the changes
in fair value of the level 3 liabilities for the period ended June 30, 2021:
|
|
Warrants
|
|
|
Convertible component
|
|
|
|
(U.S. dollars in thousands)
|
|
Outstanding at December 31, 2020
|
|
|
20
|
|
|
|
493
|
|
Fair value converted
|
|
|
-
|
|
|
|
(484
|
)
|
Fair value of issued level 3 liability
|
|
|
21
|
|
|
|
578
|
|
Changes in fair value
|
|
|
63
|
|
|
|
54
|
|
Outstanding at June 30, 2021
|
|
|
104
|
|
|
|
641
|
|
NOTE 4 – RELATED PARTY TRANSACTIONS
Related party balances as of June 30, 2021 and December 31, 2020 consisted
of the following:
Related Parties Payable
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(U.S. dollars in thousands)
|
|
Related Parties Payable due to management fee
|
|
|
162
|
|
|
|
126
|
|
General and Administrative Expenses
|
|
For the Period Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(U.S. dollars in thousands)
|
|
Management Fee
|
|
|
50
|
|
|
|
50
|
|
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
NOTE 5 – STOCKHOLDERS’ EQUITY
Common Stock
The following summarizes the Common Stock activity
for the six months ended June 30, 2021:
Summary of common stock activity for the six months ended June 30, 2021
|
|
Outstanding shares
|
|
Balance, December 31, 2020
|
|
|
786,700
|
|
Shares issued due to conversion of Notes.
|
|
|
549,675
|
|
Shares issued for services
|
|
|
21,658
|
|
Roundup shares due to reverse split.
|
|
|
2,848
|
|
Balance, June 30, 2021
|
|
|
1,360,881
|
|
On January 14, 2021 and pursuant to the SPA, YAII
exercised its option to convert the second Convertible Promissory Note principal in the amount of $50and the accrued interest in the amount
of $4 into 38,303 shares of Common Stock of the Company. The fair market value of the shares was $64.
On January 21, 2021, the Company issued 7,383
shares of its Common Stock pursuant to a service Agreement between the Company and a service provider. The fair market value of the shares
was $20.
On February 11, 2021 and pursuant to the SPA,
YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $55 and the accrued interest in
the amount of $4 into 16,713 shares of Common Stock of the Company. The fair market value of the shares was $216.
On March 22, 2021, the Company completed a reverse
stock split of its common stock. As a result of the reverse stock split, the following changes have occurred (i) every seven thousand
shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common
stock option or common stock warrant have been proportionately decreased on a 7,000-for-1 basis, and the exercise price of each such outstanding
stock option and common warrant has been proportionately increased on a 7,000 -for-1 basis. Accordingly, all option numbers, share numbers,
warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial
statements, on a retroactive basis, to reflect this 7,000 -for-1 reverse stock split.
On March 23, 2021, the Company issued 2,849 shares
of its Common Stock due to a reverse split rounding up differences.
On April 19, 2021 and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $40 and the accrued interest in the amount
of $7into 40,861 shares of Common Stock of the Company. The fair market value of the shares was $62.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share
and per share data)
On May 12, 2021 and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $60 and the accrued interest in the amount
of $2 into 44,202 shares of Common Stock of the Company. The fair market value of the shares was $103.
On May 17, 2021 and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 48,316 shares of Common Stock of the
Company. The fair market value of the shares was $85.
On May 20, 2021 and pursuant to the SPA, YAII exercised its option
to convert the Convertible Promissory Note principal in the amount of $65 into 50,611 shares of Common Stock of the Company. The fair
market value of the shares was $171.
On May 21, 2021 and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,386 shares of Common Stock of the
Company. The fair market value of the shares was $280.
On May 24, 2021, and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,407 shares of Common Stock of the
Company. The fair market value of the shares was $322.
On May 24, 2021, and pursuant to the SPA, YAII
exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $15 and accrued interest of
$10 into 11,647 shares of Common Stock of the Company. The fair market value of the shares was $68.
On May 24, 2021, and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $50 into 47,247 shares of Common Stock of the
Company. The fair market value of the shares was $281.
On May 25, 2021, and pursuant to the SPA, YAII
exercised its option to convert the Convertible Promissory Note principal in the amount of $80 into 62,138 shares of Common Stock of the
Company. The fair market value of the shares was $249.
On May 28, 2021, and pursuant to the SPA, YAII exercised its option
to convert the Convertible Promissory Note principal in the amount of $70 into 57,837 shares of Common Stock of the Company. The fair
market value of the shares was $164.
On June 1, 2021, and pursuant to the SPA, YAII
exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $20 into 15,559 shares of
Common Stock of the Company. The fair market value of the shares was $39.
On June 14, 2021, the Company issued 14,275 shares
of its Common Stock pursuant to a service Agreement between the Company and a service provider. The fair market value of the shares was
$70.